How a B2B2C Cloud Platform Fosters Innovation

My last post described some of the cloud-based home healthcare services that broadband service providers are beginning to offer. Central to this idea is third-party partnerships: allowing outside healthcare providers into the traditional “walled garden” of telecom services. It’s easy to see how this model could be extended beyond healthcare.

One can imagine all sorts of value-added cloud applications that third parties could deliver over wireline networks. Indeed, one can envision a future in which service providers follow in the footsteps of Apple’s App Store and the Google Android Marketplace, where subscribers can choose from among thousands of third-party cloud apps that take advantage of their home broadband connections, gateways, and TV set-top boxes (STBs).

The real excitement, however, would not be among consumers, but among developers creating innovative cloud applications and services for these platforms.

Making this vision a reality requires service providers to provide open application programming interfaces (APIs) and software development kits (SDKs) that will allow developers to build apps for the service provider cloud platform.

By taking this step, service providers can unlock what Cisco calls the “B2B2C” business model, a paradigm in which service providers generate revenue from third-party partnerships, and even generate transactional revenue from sales and subscriptions of cloud apps. The question is, how close are we to seeing this model put into practice on a large scale?

TV Everywhere

One potential foothold for open service provider ecosystems is the explosion of “TV everywhere” services that extend TV experiences to tablets, smartphones, and PCs. Many major service providers have launched such services, including Comcast, Verizon, Orange, and several others. If service providers are already developing software to extend content, programming guides, and TV controls to Apple and Android platforms, how long before they allow third-party developers to use the same APIs to create their own offerings?

Jason Gaedtke, vice president of Web Services for Time Warner Cable, addressed this question last year in an online video:

“This is an area that we’re very excited about. Even internally, we found that by adopting web services our different teams can collaborate more efficiently together. The next step would be maturing those web services APIs to a point that we can publish them to our partners to unlock third-party innovation, so third parties can bring their creativity to these devices.”

Developing Apps via Open Ecosystems

Projects are also under way to bring app ecosystems to the TV, some of which are quite mature. Verizon’s Widget Bazaar, for example, allows subscribers to download interactive third-party apps for their STBs. DIRECTV also offers a variety of third-party TV apps as part of its App Store, and even allows subscribers to develop their own apps for the service.

While these efforts are still relatively small in scope, the tipping point for more vibrant third-party development may be near, as competing over-the-top (OTT) video providers position app ecosystems as a key differentiator. Samsung, for example, recently announced that its TV app marketplace has seen nearly 10 million downloads since it was launched last year.

As online video providers expand their open ecosystems, service providers will increasingly look to partner with them or develop their own ecosystems to compete. The key to success, however, is not merely offering a platform for independent third-party software development, but investing organizational attention and resources into its development. After all, how did Samsung create such a successful ecosystem so quickly? By actively courting developers.

The template for successful open ecosystems is there. Whether due to competitive pressure or recognition that open innovation platforms can generate significant new revenue streams, expect to see more service providers moving in this direction in the next few years.

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